State Policies Matter: How Minnesota’s tax, spending and social policies help it achieve the best economy among the Great Lakes states.

Michigan Future’s latest report looks at Minnesota, the most prosperous state in the region with the lowest unemployment rate, and the public policies that have helped it achieve that status. Michigan Future has long argued that our state should want a high income, low unemployment economy that looks like Minnesota. Now we know how policymakers steered the state into that position. Read the press release HERE.

Michigan continues to have difficulty transitioning to a knowledge-based economy. In Michigan Future’s fifth annual report on Michigan’s transition, Lou Glazer details what states and metropolitan areas are doing the best and why.

[…] State Policies Matter: How Minnesota’s Tax, Spending and Social Policies Help it Achieve the Best …, was written by Michigan journalist Rick Haglund for Michigan Future, Inc. It looks at why Minnesota enjoys one of the healthiest economies in the country while Michigan continues to struggle. […]

Actually Illinois’ taxes are not higher than Minnesota. Not close. Illinois ranks 14th in state taxes per capita and 22nd in state taxes as a percent of personal income. Compared to 6th and 5th respectfully for Minnesota. They also have lower state and local taxes combined than Minnesota on the same metrics.

Don’t know about education spending in Illinois. Would need to do an apples to apples comparison that takes out federal funds to know how the two states compare on per capita spending on k-12 and higher education which is what we report on. My guess is its unlikely that Illinois spends more than Minnesota on education. Hard to do when you take in less in taxes.

Illinois is not doing well on employment (both unemployment rate and proportion of adults working), but it does have the second highest per capita income in the Great Lakes and one of the top 15 in the country. And we continue to believe that is the best measure of economic well being

As a transplant from Minnesota, I agree that there is a lot Michigan could learn from Minnesota. The most important difference between Minnesota and Michigan, as I see it, is that Minnesota’s largest central cities (Minneapolis, Saint Paul, and Rochester) are economically vibrant and enviably livable while Michigan’s largest city suffers disinvestment and concentrated poverty. Cities are the engines of innovation and prosperity. I don’t think we can have a strong Michigan with unhealthy central cities. The idea of bankrupt cities and school districts is unheard of in Minnesota. Long before same-sex marriage was legalized in 2013, Minnesota’s systems of local government finance were redesigned to provide relative equality and a sense that all municipalities are in it together. Michigan’s systems seem designed to facilitate fragmentation and the widening divide between haves and have-not communities. Take Michigan’s local income taxes which create perverse incentives, practically bribing companies and homeowners to abandon central cities. In the Twin Cities, a metropolitan regional planning agency oversees transit, sewers, land use planning, water supply, airports, and affordable housing. The Twin Cities Metropolitan Council has told booming suburbs they must add apartments to their land use plans or they won’t get sewer extensions. Or, take the fiscal disparities pool which shares a portion of property tax revenues between poor and rich cities and suburbs. Then there is the state funding of K-12 education from general state revenues rather than local millages and state-funded local government aid which is designed to help older communities with aging infrastructure and declining tax base (many of which were in rural areas).